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In the half year end results for Royal Mail, published today (18 November), the postal company outlined more information on its current scheme, which will contain both its long-awaited collective defined contribution (CDC) section and its defined benefit (DB) lump sum (DBLS) offering.
Based on current expectations, Royal Mail said accounting treatments for the two sections of the scheme are expected to be similar to its transitional DB cash balance scheme (DBCBS).
The new arrangements will have fixed employer contributions of 13.6%, as well as an additional 1% for employees who choose to save an additional lump sum payment. The standard employee contributions will be 6%.
“We have, for some time, been working closely with Communication Workers Union and other stakeholders to make CDC a reality for Royal Mail and its people,” the group said.
Royal Mail confirmed it expected to contribute £120m into its defined contribution plans in the next financial year. Total employer contributions for all Royal Mail Schemes – including £270m for the DBCBS and the now-closed Royal Mail Pension Plan – will therefore be around £390m for the 2021/22 year.
It comes ahead of the closure this Sunday (21 November) of a consultation launched in September by Royal Mail with its unions and staff on the CDC scheme.
It is hoped the RMCPP will launch next year if the consultation has a positive response, authorisation is granted by The Pensions Regulator, and the Department of Work and Pensions finalises regulations around it.
The creation of CDC schemes was legislated for earlier this year under the Pension Schemes Act 2021.
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